T

1. Comeback America: The Nation’s Fiscal
Challenge and A Way Forward
Webinar
Hooks Books with Government Information Group
Bridgeport, CT
November 3, 2011
Hon. David M. Walker
Founder and CEO
The Comeback America Initiative
and
Former Comptroller General of the United States

2. Growth of Government
1800 2011 2040
US GDP: $9.25 Projected US GDP: $15.24 Projected US GDP: $29.7
Billion Trillion Trillion
(Constant 2011 Dollars) (Constant 2011 Dollars) (Constant 2011 Dollars)
Source: Historical Statistics of the United States, Millennial Edition On Line, Cambridge 2006; CBO, The Budget and Economic Outlook: An Update, August 2011;
CBO, CBO’s Long-Term Budget Outlook, Supplemental Data, June 2011. Compiled by TCAII.
Note: Federal Spending for 2040 is based on the Alternative Scenario Estimates.
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3. Composition of Federal Spending
(% of Total Outlays)
Defense Other Discretionary Medicare and Medicaid
Social Security Other Mandatory Net Interest
7% 6%
20%
12%
12%
42%
15%
20%
19%
4%
20% 23%
307 % Growth in
1970 2010 Dollars 2010
($944 Billion) ($2.901 Trillion)
Source: CBO, Budget and Economic Outlook: Fiscal Years 2011 Through 2021, Historical Tables. Compiled by TCAII. Note: All numbers are in constant 2010 dollars .
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4. Federal Spending &
the Political Party in Power
$3,500
Democratic Controlled Congress Republican Controlled Congress Patient Protection and
Affordable Care
Split Congress Republican President Act of 2010
America Recovery and
Democratic President Reinvestment Act of 2009
$3,000
Medicare Prescription Drug,
Improvement, and Modernization Act
of 2003and the Invasion of Iraq
End of Statutory Budget Controls 2002
$2,500
Billions of Constant 2005 Dollars
Deficit Reduction
Act of 1993
2001 Invasion
Budget Enforcement of Afghanistan
$2,000 Act of 1990
Gramm-Rudman-Hollings
Balanced Budget and Emergency
Deficit Control Act of 1985
$1,500
End of WWII Social Security Act of 1965
(Medicare)
$1,000
Korean Conflict Vietnam Conflict
1950-53 1960-75
$500
$0
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
Fiscal Years
Source: OMB, Budget, Historical Tables, Table 1.3—Summary of Receipts, Outlays, and Surpluses or Deficits (−) in Current Dollars,
Constant (FY 2005) Dollars, and as Percentages of GDP: 1940–2016. Compiled by TCAII.
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5. Federal Revenues &
the Political Party in Power
$3,000
Democratic Controlled Congress Republican Controlled congress Jobs and Growth Tax
Economic Growth and Tax
Relief Reconciliation
Relief Reconciliation
Split Congress Democratic President Act of 2003
Act of 2001
&
&
Republican President Invasion of Afghanistan
Invasion of Iraq
$2,500
Billions of Constant 2005 Dollars
$2,000
Omnibus Budget
Reconciliation Act
Tax Reform Act of 1986 of 1993
Economic Recovery
Tax Act of 1981
$1,500
Revenue Act of 1964
$1,000
Vietnam Conflict
End of WWII 1960-75
Korean Conflict
1950-53
$500
$0
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Fiscal Years
Source: OMB, Budget, Historical Tables, Table 1.3—Summary of Receipts, Outlays, and Surpluses or Deficits (−) in Current Dollars,
Constant (FY 2005) Dollars, and as Percentages of GDP: 1940–2016
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6. Federal Debt Burdens
6

7. Growing Foreign Depends
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8. Federal Financial Hole
(For Fiscal 2000 and 2010)
In Trillions of Dollars 2000 2010
Explicit Liabilities $ 6.9 $16.4
•Publicly Held Debt 3.4 9.1
•Military & Civilian Pensions & Retiree Health 2.8 5.7
•Other Major Fiscal Exposures 0.7 1.6
Commitments & Contingencies 0.5 2.1
E.g. Pension Benefit Guaranty Corporation, Undelivered Orders
Actuary's
Trustees’
Alternative
Estimates
Scenario
Social Insurance Promises 13.0 30.8 43.1
•Future Social Security Benefits 3.8 8.0 8.0
•Future Medicare Benefits 9.2 22.8 35.1
Future Medicare Part A Benefits 2.7 2.7 7.3
Future Medicare Part B Benefits 6.5 12.9 20.6
Future Medicare Part D Benefits - 7.2 7.2
Total $20.4 $49.3 $61.6
SOURCE: Data from the Department of Treasury, 2010 Financial Report of the United States Government.
NOTE: Estimates for the Actuary’s Alternative Scenario are found in note 26 of the 2010 Financial Report of the United States. Future liabilities are discounted to present value based on a real
interest rate of 2.9% and CPI growth of 2.8%. The totals do not include liabilities on the balance sheets of Fannie Mae, Freddie Mac, and the Federal Reserve. Assets of the U.S. government not
included. Actuary 2011 alternative scenario estimates for unfunded Medicare liabilities are $37 Trillion (Part A: $8.5; Part B: $21; Part D: $7.5)
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9. Fiscal Gap 2011
(After Debt Ceiling Increase)
4,000
Mandatory spending and net interest are equal to about 97% of total revenue.
$3,597 Billion This means there is only 3% of federal revenues left to cover all discretionary
3,500
Discretionary
3,000
Spending $1,353 Billion
Billions of U.S. Dollars
2,500 $2,314 Billion
2,000
1,500
Mandatory
$2,023 Billion
1,000
Spending
500
0
Net Interest $221 Billion
Outlays Revenues
Source: Congressional Budget Office, Budget and Economic Outlook: An Update, August 2011, Budget Projections, Table: 1.2. Compiled by TCAII.
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10. Total Federal Debt &
the Political Party in Power
Democrat Controlled Congress Republican Controlled Congress Split Congress
Republican President Democratic President
$50,000
As of 12/31/2010 $45,426
$45,000
$40,000
$35,000
Real 2010 Dollars
$30,000
$25,000
End of WW2 $22,183
$20,000
$15,000
$10,000
$5,000
$0
1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
SOURCES: U.S. Census Bureau, U.S. Department of Treasury, U.S. Bureau of Labor Statistics, U.S. House, and U.S. Senate. Compiled by TCAII
NOTE: All amounts are adjusted for inflation and in 2010 Dollars. Federal Debt is the total public debt outstanding and intragovernmental holdings.
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11. Fiscal Fitness Index: Overall Results
(Best to Worst)
1. Australia 18. Mexico
2. New Zealand 19. Israel
3. Estonia 20. Slovenia
4. Sweden 21. Austria
5. China 22. Finland
6. Luxembourg 23. France
7. Chile 24. Spain
8. Denmark 25. Germany
9. United Kingdom 26. Belgium
10. Brazil 27. Italy
11. Canada 28. United States
12. India 29. Hungary
13. Poland 30. Ireland
14. Netherlands 31. Japan
15. Norway 32. Iceland
16. Slovakia 33. Portugal
17. Korea 34. Greece
Source: CAI & Stanford University’s Schools of International Policy Studies and Public Policy Program, Sovereign Fiscal Responsibility Index.
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12. Comparative Health Costs
9,000
$7,960
8,000
The United States spends more than double the OECD average with below average
health care results.
7,000
Per Capita Health Care Costs
6,000
U.S. Dollars
5,000
$4,363 $4,218
$3,978
4,000 $3,722
$3,361 $3,487
$2,983
3,000
2,000
1,000
0
OECD Average Canada France Germany New Zealand Sweden United Kingdom United States
Source: Organization for Economic Cooperation and Development, OECD Health Data 2011. Compiled by TCAII.
Note: Per capita health expenditures for 2009 uses purchasing power parity for all dollar amounts.
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13. Relative Defense Spending
The United States spent more on defense in 2010 than the other 14 highest
defense budgets combined. The Majority of which are our allies $698 Billion
700
$646 Billion
Turkey
Canada
600 Australia
In Billions of Constant 2009 Dollars
South Korea
Brazil
500 Italy
India
Germany
400
Saudi Arabia
Japan
300
U.S.A
Russia
200 France
United Kingdom
100
China
0
SOURCE: Stockholm International Peace Research Institute, SIPRI Military Expenditure Database 2011. Compiled by TCAII.
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14. Federal Revenue Composition
Total Revenue in 2011 $2.3 Trillion
Individual Income Taxes Excise
47% 3%
Corporate Income
Tax 8%
0 Estate and Gift 1%
Other 9% Custom Duties 1%
Miscellaneous 4%
Payroll Taxes 35%
Source: Congressional Budget Office, The Budget and Economic Outlook: An Update, August 201.
Note: New figures for the components of other spending were not published. The same percentage of revenues for these figured is assumed from the June 2011 CBO report.
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15. Progressive Tax System
15

16. Effective Tax Rates
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17. Key Systemic Challenges
• Expansion of government at all levels
• Health Care Costs
• Retirement Income Costs
• Disability and Welfare Related Costs
• Critical Infrastructure Needs
• Education Costs
• Corrections Costs
• Outdated and Inadequate Revenue Systems
• Myopia, Tunnel Vision, Special Interests and Self-Interest.
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18. CAI’s Fiscal Framework
Scope of CAI’s illustrative Fiscal Frameworks:
• Budget Controls and Process Reforms
• Social Security
• Medicare, Medicaid, and Healthcare
• Defense and Other Spending
• Comprehensive Tax Reforms
• Constitutional Amendments
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19. Feasibility Test
Fiscal Reforms Must Meet a Feasibility Test:
1) Do they make economic sense?
2) Are they socially equitable?
3) Are they culturally acceptable?
4) Do they pass a math test?
5) Are they politically feasible?
6) Can they achieve significant bipartisan support?
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20. Transforming Government
(Basic Questions for Policies & Programs)
• When & why was it created?
• Have conditions changed, and have we adapted?
• How are we measuring success, and are we achieving desired
outcomes?
• Are there multiple programs, and if so are they working in an integrated
manner?
• Are we using the experience of others (e.g., countries, states) to
replicate success and avoid mistakes?
• Can we afford and sustain it in its present form?
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21. Baselines Matter
President's "Adjusted CBO August Baseline" "Current Policy" Baseline With Automatic Cuts
Current Law Baseline Without Automatic Cuts Current Law Baseline With Automatic Cuts
$12,000
$10.6 Trillion
$10,000
$9.3 Trillion
Cumulative Deficit ($ Billions)
$8,000
$6,000
$4.7 Trillion
$4,000
$3.5 Trillion
$2,000
$0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Congressional Budget Office, Budget and Economic Outlook August 2011. ―Current law baseline with automatic cuts‖ assumes $1.2 in automatic
cuts due to the Budget Control Act of 2011 provisions. ―Current Policy‖ Baseline assumes a continuation of certain policies that are not written into current
law, including the extension of expiring tax provisions from Bush/Obama tax cuts, indexing the Alternative Minimum Tax for Inflation, maintaining
Medicare payment rates, and a reduction in troops deployed for overseas in Afghanistan to 45,000 by 2015. President’s ―Adjusted CBO August Baseline‖ is
from ―Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction‖ September 2011.
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22. The Super Committee
• The Super Committee must first decide how it will
keep score:
Current Law Baseline, or
Current Policy Baseline
• It should then focus its recommendations on the
following:
– Meeting or exceeding the established deficit-reduction
target
– Helping generate economic growth and reducing
unemployment
– Facilitating greater deficit-reduction progress from 2012
through 2013

23. Public Approval of Congress
“Do you approve or disapprove of the way Congress is handling it’s job?”
100
90 84% Approval After Sept 11th
84% Disapproval
in August after
80 Debt Ceiling
Debate
70
Percentage
60
50 Approve
Dissaprove
40
30
20
13% Approval in
August after Debt
10 Ceiling Debate
0
1974 2011
Source: Gallup/Newsweek. Compiled by TCAII.
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24. What Can You Do?
• Educate others using the Fiscal Facts prepared
presentation and notes
• For further information about:
– Non-partisan facts and possible solutions on fiscal sustainability
Sign up at
The Comeback America Initiative’s website
www.TCAII.org
– Providing progress over partisanship sign up at
No Labels website
www.NoLabels.org
• Encourage other to check out these sites and sign up
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25. Questions?
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